If it wasn’t clear before the LNG Canada announcement, it
should be clear now that there is a problem with British Columbia’s greenhouse
gas (GHG) policy – a problem that will become even clearer and more acute if LNG
Canada or others propose additional liquefaction facilities in the province.
The policy sets out fixed GHG emission reduction targets by
specified dates. The problem is that government set these targets without careful
consideration of what we would have to do to meet them and what costs that
would entail.
British Columbians are prepared to incur significant costs
to reduce GHG emissions and contribute to the fight against global warming and
climate change. Widespread acceptance of the carbon tax is evidence of that. For
most people, however, the costs have to be demonstrably well-considered and reasonable.
But there is little reason to believe that the emission targets the government
has established, particularly with new and potentially growing liquefaction
activity in the province, are either well-considered or reasonable.
The government has stated that to make room for the GHG
emissions from liquefaction and related gas industry activity, BC households
and industry will have to ‘tighten’ their belt – reduce their emissions even
more than they would have without the LNG Canada project. Exactly what that
requires and what it will cost is as yet unclear. All we know for sure is that whatever
we would have done without LNG, we will have to do more with it. And if there
are other new LNG developments in the province, we will have to do even more
still. Whether all of the additional measures will be feasible and reasonable
to implement, and if they are, why they weren’t called for in the first place, with
or without LNG, is unclear.
The problem is not just that we don’t know what the required
‘belt-tightening’ will entail or cost, we’re not even sure why we should be
called on to do it. Government policy may set out fixed emission reduction targets
for British Columbia. But what people logically care about is our contribution
to global emissions because it is global, not just B.C. emissions that will
determine the extent and consequences of global warming and climate change.
There is some uncertainty as to the impacts that LNG exports
from B.C. will have on global emissions. LNG proponents have argued B.C. LNG
will enable recipient countries to displace higher GHG-emitting coal-fired
generation. Opponents say LNG could displace emission-free renewable power. Arguably
the most likely scenario, assuming BC production does not significantly affect
world gas prices and recipient country energy plans, is that LNG exports from
B.C. will displace natural gas and LNG production elsewhere. If that is the case, there
would be no increase in global emissions as a result of LNG exports from B.C.;
indeed there would likely be some reduction because of the relatively low
carbon intensity of LNG Canada as compared to alternative global sources of gas
supply.
The question naturally arises: why should British Columbians
be called on to tighten their belts, whatever that may mean and cost, to accommodate
a project that may not cause any increase in global GHG emissions – that may in
fact contribute to reducing them? Why should we be governed by emission reduction
targets that were set without well-considered regard to their implications for
British Columbians and their link to global emissions?
British Columbia needs to take a fresh look at its GHG
policy in light of recent and possible future gas industry developments. We
need to recast our commitment in terms of what costs we are willing to incur to
reduce emissions, and be clear it is reduction in global emissions, not just
emissions in B.C., that we want to achieve.
A major improvement for the efficiency and transparency of
our emission reduction efforts would be for government to establish a dollar
cost of carbon that will govern a ‘reasonableness’ test for its GHG reduction policies
and measures. Public debate will be required to determine exactly what that
cost should be – whether it should be $50/tonne, $100/tonne or more. It
certainly will have to take account of the amount of emission reductions we are
seeking by specified dates, but it will also have to take into account what
opportunities there are to reduce, capture or offset emissions; what technological
improvements are expected; what other leading jurisdictions are doing; and
other factors.
An explicit determination of the cost we are willing to
incur to reduce carbon emissions will enable government to move forward in a
rational, understandable way. The dollar cost will inform people of the
adequacy of and need for increases in our carbon tax. It will help government allocate
its GHG policy expenditures to the most cost-effective emission-reduction electrification
and other initiatives. It will help screen regulatory initiatives to bring some
consistency with what is being called for in different sectors.
Most importantly, an explicit dollar cost of carbon will
preclude a call for ‘belt-tightening’ without regard to what that may mean or
cost. And it could be applied, with appropriate policy and tax design, to the
cost of British Columbians’ contributions to global emissions, not simply emissions
in B.C.
British Columbians want to be leaders in the fight against
climate change. That doesn’t have to mean leaders in the establishment of
targets that aren’t well-considered or reasonable. We can be leaders in the
development and application of very thoughtful policy that will significantly contribute
to reductions in global emissions and at the same time promote widespread public
understanding and support.
